Manufacturing Leaders Call On UK Gov for More Support

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Manufacturing leaders call on UK gov. for more support
As the UK welcomes its new government, and following the King’s Speech, it is becoming clear the manufacturing industry requires more support

Following the King’s Speech earlier this week, and amid a period of high inflation, political changes, and ongoing supply chain issues, the publication of Crowe and CBM's 2024 Manufacturing Outlook Report has revealed significant dissatisfaction among UK industry professionals.

According to the report, 87% of respondents are unhappy with the current level of government support for the manufacturing sector.

“With more than half the world’s population voting for future governments this year, the manufacturing sector is focused on areas that can be directly influenced and improved through appropriate policy support and intervention,” says Johnathan Dudley, Partner and Head of Manufacturing at Crowe.

He's not the only one calling for more support for the industry. 

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Key findings from the Manufacturing Outlook Report include:
  • Almost 90% of manufacturers (87%) feel that the government is not providing adequate support to the sector.
  • 45% of them identify global instability and economic challenges as major obstacles to growth.
  • Nearly 70% of manufacturers anticipate an increase in sales this year.
  • In 2023, 70% of manufacturers invested in carbon-neutral initiatives, marking a 33% rise.
  • To keep up with inflation, 70% have increased worker wages.
  • 71% foresee a significant impact from Industry 4.0 technology on the sector.
  • Only 5% now consider energy costs a growth barrier, a 20% decrease from 2023.

Industry professionals call for more government support

The report indicates that global tension, Brexit, inflationary pressures and political turbulence are increasingly affecting the sector. As a result, many industry professionals are calling on the government for more support. 

“The UK drastically needs a coherent and long-term focused industrial strategy," says Adam Sivner, Managing Director for Houlihan Lokey’s Industrials Group. 

Adam Sivner, Managing Director, Houlihan Lokey’s Industrials Group

"The country has a long-standing pedigree in various critical industries and remains a world leader in aerospace and defence, flow control, satellite communications technology, and electronic components, amongst others.

"Given such history, UK manufacturing has seen numerous businesses, such as Cobham, Ultra, and Meggitt, become acquisition targets. Concurrently we are seeing significant investment in digitalisation and skilled labour on a global basis, which is making the UK less attractive to manufacture in.

If the UK is to remain as a home to world leading manufacturers, then it will need a detailed investment strategy to help support these businesses in competing on the global stage and ensure they can resist being consolidated by larger acquirers.”

In March 2024, the previous government had announced a significant investment package for the manufacturing sector, including a UK£92 million joint government and industry investment to expand facilities to manufacture life-saving medicines and diagnostics products, and the Advanced Manufacturing Plan- which aims to give the industry more long-term certainty. 

However, follow-through is still uncertain as King Charles III opened a new session of parliament with his King's Speech- announcing 39 policies that the new Labour government has pledged to implement. 

These included the establishment of an Industrial Strategy Council, more investment in industry, skills and new technologies, the creation of a National Wealth Fund, and the establishment of Great British Energy. 

Houses of Parliament, London

Manufacturers react to King's Speech

"The UK needs to support manufacturing or we risk steady decline of the sector," says Jonathan Memel, Senior Manager of Grants at Ayming UK.

"There’s a huge amount of competition around the globe to attract high-value manufacturing businesses - the USA, for example, has unleashed billions in clean technology manufacturing as part of its Inflation Reduction Act.

"The prior government signalled early investment into high-value manufacturing, such as the UK£4.5 billion outlined in the Advanced Manufacturing Plan, but most of the detail on the funding stalled, and there’s now a risk that this momentum will be lost if the new Government doesn’t follow through.

"There are two key actions Labour need to take: they must stimulate R&D to develop more efficient manufacturing processes, and therefore make us more competitive; and they must help to de-risk the capital expenditure needed to onshore the supply chains that are critical to the UK’s industrial strategy, such as for carbon capture and offshore wind.

"Grants are a proven way to channel both lines of support to UK manufacturers. As grants only every cover a percentage of the full costs needed for UK manufacturers to grow, they would be a great example of the ‘crowding-in’ effect that the new government aims to stimulate with immediate additional private investment.

"Ultimately, there’s a lot to consider around the manufacturing industry. It could certainly be a smart move to allocate a dedicated minister considering how important the sector is to our industrial strategy, especially if that minister had experience in the sector and understood its challenges." 

Jonathan Memel, Senior Manager of Grants, Ayming UK

There are even calls for a Manufacturing Minister

"While government oversight isn't always the right answer, manufacturing is an area that can benefit from a dedicated minister," says Njy Rios, Partner for R&D Tax Incentives at Ayming UK.

"We’re currently lagging behind on the global scale and aren’t even placing in the top 10 countries for manufacturing.

"The US states that have appointed a dedicated manufacturing minister are those that are committed to repositioning themselves as manufacturing leaders. There are also different tax incentives, such as sales and use tax exemptions, that different states put in place to further encourage manufacturing in their state and the USA.

"If the UK is to compete on a global scale, then targeted government focus is required to properly support, incentivise and grow the sector in the face of global competition and the support that other countries are providing.

"That being said, not only is targeted growth required, but the Government must ensure the growth aligns with green tech, clean energy, and climate change obligations. The goal of boosting manufacturing can ultimately conflict with environmental goals so it requires careful oversight, which a dedicated minister could take responsibility for."

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